BusinessDay 12 Apr 2018

Thursday

Thursday 12April 2018 FINANCIAL TIMES COMPANIES & MARKETS @ FINANCIAL TIMES LIMITED Venezuela stopped bond payments in September Central bank data suggest government is in ‘a stealth default’, says analyst JONATHAN WHEATLEY Venezuela stopped paying bondholders in September, according to central bank data, contradicting statements by President Nicolás Maduro that the country would continue to honour its debts while negotiating a resettlement with its creditors. The data show that regular foreign debt payments of hundreds of millions of dollars a month, in line with the country’s sovereign obligations, fell to a few tens of millions from last October for fees and the legacy of a 1980s-era restructuring. “This proves that Venezuela is deliberately hoodwinking bondholders and engaging in a stealth default,” said Russ Dallen of boutique bank Caracas Capital, who follows Venezuelan debt closely. The data were posted in an Excel file as part of a recent revamp of the central bank’s website and include monthly expenditures in US dollars on public foreign debt payments going back to 1996. Previously, data on foreign debt payments were published in the form of a ratio that revealed little information, Mr Dallen said. “This must have been posted by an intern,” he added. RALPH ATKINS HNA, the Chinese conglomerate which is seeking to strengthen its finances, has abandoned plans to float Swissport, the air services group, just weeks after it was forced to pull plans to list the Gategroup catering group that it also owns. Swissport said in a brief statement that the planned initial public offering and listing on the Swiss stock exchange would be deferred “due to current market conditions,” without providing further details. Swissport, which provides ground services and cargo handling, had revenues of €2.8bn last year. The decision appeared a further setback for HNA following the collapse last month of plans to raise up to SFr1.3bn ($1.37bn) by floating up to 65 per cent of Gategroup, which it had acquired less than two years previously. Other Swiss companies have pushed ahead recently with IPOs. However the decision to pull the Gategroup IPO highlighted wariness among investors about taking stakes in companies alongside HNA, although bankers close to the deal said it also flopped because of the Mr Maduro announced on November 2 that the country would restructure and refinance its debts after making one last payment on a bond owed by PDVSA, the stateowned oil company. S&P Global, the rating agency, declared the country in default shortly afterwards. Yet holders of bonds issued by PDVSA and Elecar, a state-owned electric utility, have continued to receive sporadic payments, which have amounted to about $2.5bn since Mr Maduro’s announcement. Several payments have been made late, sometimes after the 30-day grace payment for coupon payments. No payments at all have been received on bonds issued by the government of Venezuela, despite assurances that the process of payment was under way. The central bank data, which cover payments of sovereign debt only and exclude obligations by PDVSA and other state entities, show that just $83m was paid in October, compared with sovereign obligations amounting to $465m, according to data from Caracas Capital. Payments in November fell to $28m, compared with obligations of $183m, and in December declined to $23m, compared with obligations of $242m. China’s HNA drops plans to float Swiss air services group price demanded. HNA ran into controversy in Switzerland last year when the country’s takeover watchdog ruled that the Chinese group had provided “untrue or incomplete” information regarding its ownership when it acquired Gategroup for SFr1.4bn in 2016. The Chinese conglomerate has an estimated $20bn in debt maturing this year or next. The company has sold some assets and extended credit arrangements with banks which — until the Gategroup setback — had helped it navigate a turbulent first three months of the year. Immediately after the Gategroup setback, Swissport had said its listings plans — announced in January — remained on track. But Tuesday’s decision to pull the float did not surprise observers. Swissport’s IPO would almost certainly have proved even more challenging than Gategroup’s because Swissport’s finances are more intertwined with its Chinese parent, due to a series of short-term loans the Swiss group has made to HNA affiliates. HNA and Swissport had given no indication of how much would have been raised from the planned IPO, but said HNA would have retained a “long term strategic shareholding”. ANJLI RAVAL Oil extended gains from the previous session, rising above $70 a barrel, as the US neared a decision about whether to launch a strike on Syria in response to an suspected chemical attack. Brent crude, the international oil benchmark, rose $1.49 a barrel in Tuesday afternoon trading to $70.14, culminating in a more than 4 per cent jump in prices over the past two days. West Texas Intermediate, the US marker, also rose $1.25 a barrel to $64.68. Tension has mounted after an attack on Douma in eastern Ghouta which the Syrian American Medical Society, a medical relief organisation, said killed dozens of people and injured hundreds more, and which C002D5556 coincided with worries that US sanctions against Russia and potentially Iran will hit oil supplies. Following new restrictions on Russian business people, including aluminium producer Rusal and its founder Oleg Deripaska, some traders have raised questions about any impact on the oil sector. Vladimir Bogdanov, co-owner of Surgutneftegas, which produces more than 10 per cent of Russia’s oil, has also been named leading to concerns the pool of sanctions-hit individuals and companies could widen to cover larger oil companies. “The aluminium market was reacting very firmly on the latest US sanctions against Russian aluminium interests and that is helping to develop the ‘what-if’ scenarios on the basis of US sanctions on Russian BUSINESS DAY Venezuela’s President Nicolas Maduro launches a new oil-backed cryptocurrency called “Petro” in Oil extends gains to breach $70 a barrel A3 oil interests,” said Olivier Jakob at Petromatrix. At the same time, the US is weighing the prospect of withdrawing from Iran’s nuclear deal with western powers, which some market participants have said could hit crude supplies from the Opec producer. “We regard such fears as exaggerated, in the case of both Iran and Russia,” said Carsten Fritsch at Commerzbank. Still, he said, “psychological factors” are driving prices. Geopolitical anxieties have offset concerns about a trade war between the US and China that could hit global economic growth and, in turn, oil demand. Robust consumption has helped prices to recover above $70 a barrel alongside production cuts from big producer nations led by Opec and Russia. Start-up offers automatic switching to cut home energy bills Switchcraft to move customers to cheaper fuel deals CLAER BARRETT AND JAMES PICKFORD A start-up energy switching service is promising to save households time and money by automatically switching them to a cheaper deal in the market “forever”. Switchcraft, the idea of ex-City trader Andrew Long, claims the free service can save users an average of £313 “year after year” by automatically switching energy provider as customers roll off the best deals, meaning they avoid being price-gouged by expensive “standard” tariffs. “The best deals are for new customers, so the 83 per cent of the population that don’t find the time to switch are overcharged,” said Mr Long. “Switchcraft provides a hassle-free solution to staying on the best energy deal permanently.” According to Ofgem, the energy regulator, 5.1m electricity consumers and 4.1m gas consumers switched supplier in 2017, producing between them the highest total for almost a decade. Switchcraft competes with price comparison websites but, unlike such services, its users register their details once and then are automatically moved to the best price plan without having to do anything else. “We don’t have TV adverts, and we don’t want to use gimmicks,” said Mr Long referring to the succession of opera singers, meerkats and twerking builders used by his competitors. “They need to be memorable. In a way, we want people to forget about us. You only have to sign up once — and we want to keep on doing a decent job for people.” Consumer groups have censured utilities companies for penalising customers for their loyalty, reserving their best rates for those who sign up. Citizens Advice calculated that consumers who were loyal to their existing providers of services such as energy, mobile, broadband and home insurance, were missing out on up to £1,000 a year by failing to switch. Automatic switching is already offered by services such as Flipper and Switchd. Both charge a fee: Flipper of £25 a year; Switchd charges £1.99 a month. Other services also calculate the annual savings of moving and notify users online. “The problem is, if you’re sending people a reminder, you’re not actually taking it off their to-do list,” said Mr Long. “You’re a busy professional. You sign up to our website. We do it all for you — and that problem is now gone, forever.” Like price comparison websites, Switchcraft takes a commission from energy companies for bringing in new customers. For this reason, it only covers around two-thirds of energy suppliers (including all of the big six) as not all pay commissions. Andrew Hagger of consumer website MoneyComms said the restriction might give potential users of the service some pause. “My concern would be that you’re only having a limited choice and possibly missing out on some of the better deals.” Mr Long and Switchcraft cofounder and chief technology officer Rob Porter hope to expand Switchcraft into insurance, broadband, mobile phones or any market “where people buy household services on a repeat basis”. About 1,000 customers have signed up for its automatic energy switching service so far. When customers’ fixed-term contracts draw to a close, the technology behind the website searches for a cheaper deal. Customers are informed by email of the new supplier and estimated savings versus staying with the same provider, before their supply is switched.

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